Where does Provision for Discount on Debtors appear in the financial statements?
Answer and explanation
Correct answer: C. Deducted from debtors in the balance sheet and debited to profit and loss account
- Step 1: Identify the treatment of provision for discount on debtors.
- Step 2: It is created after deducting bad debts and provision for doubtful debts from total debtors.
- Step 3: It is debited to Profit and Loss Account as an expense and shown as a deduction from Debtors in the Balance Sheet.
Answer
Deducted from debtors in the balance sheet and debited to profit and loss account.
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